2304 GMT [Dow Jones]--Spot steel scrap prices are back at a
discount versus pig iron after a 23% drop over the past five months, Citi
analyst Ephrem Ravi says in a note. "This removes some downside pressure
on scrap prices in the short term, but also removes some marginal downside
support for iron-ore prices that we had over the summer," he says. Given
scrap is the closest alternative for iron ore in steel making, prices of scrap
and iron ore "are always correlated," he says. Scrap has typically
traded at a $5/metric ton discount to the pig-iron equivalent price over the
past decade. It is now at a $10 discount, after having surged to a more-than
$100 premium as recently as April, he says. (rhiannon.hoyle@wsj.com)